Simply put, it is hard to understand the dynamics of a balance sheet. Especially if you don’t have hands-on experience of preparing it before, the process is going to be overwhelming. In other words, you need to embrace a plethora of assets and liabilities, which are hard to find. Therefore, we recommend you to sift …
The Company stockholders’ equity also known as shareholders’ equity is an account contained in the balance sheet. It expresses the amount the owner or owners of a company has invested in the business over time. In this article, you will get to understand the components of stockholder’s equity in the balance sheet, its calculation, and …
The capital structure of a company speaks a lot about the financial position and future prospects of growth. The capital structure of a business entity represents the source of funding. More generally, it is recommended to keep the debt financing at a lower level as compared to equity financing. But there are many instances when …
Understanding Loan In Balance Sheet: Classification, Recognition, Measurement & More Read More »
Retained Earnings When a company is formed, the main objectives behind setting up a business are earning profits and expanding the business in the future. Profits are the lifeblood of any business, either sole proprietorship, partnership, or corporation. A business owner can expand the business by reinvesting his profits. A partnership or a corporation can …
The financial statements of a company tell about different aspects of the business. Financial health, future growth prospects, underlying problems, expenses, revenues, liabilities, and assets are shown in income statements and balance sheets. Income taxes and sales taxes are critical elements of a company’s financial calculations, valuation, and operations. Income taxes are payments made by …
The International Accounting Standards require companies and business entities to report their financial information in their financial statements. The balance sheet is the health statement of a business entity that reflects the financial obligations, assets, and shareholder’s equity. Different standards under IAS dictate measurement, recognition, and disclosure of varying assets and liabilities of the balance …
Liabilities in a Balance sheet are the commitments of the company to external parties. These are categorized as current (payable under 12 months) and non-current (payable in more than 12 months) liabilities. Defined under the IFRS: “A company’s present liability is the obligation stemming from previous events, which are to result in an outflow of …
Goodwill is an immaterial asset linked to the acquisition by a different company. Goodwill is an intangible asset linked to a company combination in accounting. Goodwill is entered when a firm purchases an additional company, in this case, the price paid to purchase is more than the fair value of all the assets of the …
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If you reduce the complete balance sheet of a company to its basic form, you can see that the assets of the company must equal the sum of its liabilities and equity, just like the equation below; Assets = Liabilities + Equity Now, if we rearrange the equation above to move equity to the left-hand …
Understanding Stockholder Equity in the Balance Sheet – Explained Read More »
What are Accounts Payable? During the normal course of business, credit transactions that quite common. This implies that companies procure goods and services at an earlier date, and then the amount is settled later. This gives them an added advantage to companies in terms of cash flows. When a company purchases goods and/or services on …
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